The Affordable Care Act (ACA), also known as Obamacare, required taxpayers to have health insurance coverage. Prior to 2019, individuals who did not have coverage or a waiver were charged a penalty when they filed their tax returns. In 2020, this penalty was repealed in all states except in Massachusetts, New Jersey, Vermont, California, Rhode island and the District of Columbia.
Those with health insurance who meet the legal definition of “minimum essential coverage” will generally receive Form 1095-B from their health care insurer or their employer if they work for a small business with fewer than 50 full-time employees.
Learn more about Form 1095-B, the purpose of this form and who needs to file the 1095-B form at tax time.
What Information Is On The 1095-B Form?
Form 1095-B provides insured individuals with information about their health coverage. It includes four main components:
- Part I – Identifies the individual who is the holder of the insurance policy. For example, an employer-sponsored health plan would typically name the employee on the policy.
- Part II – Identifies the name of the employer if the health coverage is from an employer-sponsored health insurance plan.
- Part III – Identifies the insurance company that is providing the health insurance coverage.
- Part IV – Lists each person in the household who is covered by the insurance. Next to each name, there is a box that checks if the person was covered by insurance for all 12 months of the year.
Form 1095-B provides taxpayers with proof that they had health coverage in a particular calendar year. Employees who were covered under an employer-sponsored health insurance plan may receive a similar document known as a 1095-C. This form is essentially the same as a 1095-B Form as it includes much of the same information. The main difference is that 1095-C is generated by larger companies with 50 or more full-time employees. Some individuals may receive both forms depending on how their employer’s health coverage is set up.
1095-A vs. 1095-B vs. 1095-C
It is easy to get confused when dealing with similar tax documents. Forms 1095-A, 1095-B and 1095-C all contain similar information that may be required for taxes. Here is a look at these three tax forms and how they differ:
Form 1095-A, or Health Insurance Marketplace Statement, is a document designed for people who have health insurance coverage through the insurance Marketplace, also known as the exchange.
Form 1095-B, or Health Coverage, is mailed to individuals by their insurer or employer to report minimum essential health coverage. This important tax form provides information about the type of health coverage, the number of months that the individual was covered by health insurance and the names of the people who were covered by the plan.
Form 1095-C, or Employer-Provided Health Insurance Offer and Coverage Insurance, is sent to employees who work for companies that have 50 or more employees. This document outlines the type of health insurance coverage that the employer offered and if the employee enrolled in coverage.
Who Must File Form 1095-B?
The most common question amongst taxpayers, is regarding who is required to file a 1095-B Form. According to the Internal Revenue Service (IRS), anyone that provides minimum essential coverage to a person during a calendar year must file an information return that reports the coverage. Form 1094-B (transmittal) is used by filers to submit Form 1095-B (returns).
Any employer, including a government employer, who is subject to the employer shared responsibility provisions that sponsor self-insured group health coverage will typically need to report information about coverage on Form 1095-C instead of 1095-B. Employers that offer employer-sponsored health insurance to non-employees who enroll in coverage will need to use Form 1095-B instead of 1095-C.
Health insurance carriers and issuers are required to file Form 1095-B for most types of health insurance coverage, including insured coverage sponsored by employers and individual market coverage. Some types of coverage are reported by a program’s government sponsors, such as Children’s Health Insurance Program (CHIP), Medicare, Medicaid and the Basic Health Program.
Health insurance carriers and issuers are generally not required to file Form 1095-B in individual market qualified health plans if the individual enrolled in health coverage via a Health Insurance Marketplace. Instead, coverage is typically reported directly by the Marketplace on Form 1095-A. Health insurance issuers are required to file 1095-B if an employee obtained coverage through the Small Business Health Options Program (SHOP).
Form 1095-B For Employers
If companies meet two specific conditions, they are responsible for filing Form 1095-B. The first condition is that they must offer health coverage to their employees. The second condition is that the company must be “self-insured”. This means the company, not the insurance company, pays for the medical bills of its employees. Businesses that do not meet both of these conditions are not responsible for handling Form 1095-B; however, their employees may still receive Form 1095-B from their insurer.
Form 1095-B was created by the IRS to fulfill the requirements of the ACA. The entity that provides minimum essential coverage to an individual is required to send to that individual, Form 1095-B, or in the case of larger employers, Form 1095-C. Federal regulations state that it is the responsibility of insurance “providers” to send these forms, but the term “provider” is often confused with “sponsor.” A provider is a company that actually pays the medical bills, while a sponsor is someone who arranges the health coverage.
There is a deadline by which 1095-B forms must be completed and mailed to the proper parties. The annual deadline for the Marketplace, insurers, certain employers and other coverage providers is January 31.
Speak With A Premier Benefits Consultant
Organizations that are responsible for sending Form 1095-B to applicable employees may have difficulty navigating the complex laws regarding health coverage reporting. Working with an experienced benefits consulting group can help answer any questions and eliminate any concerns that employers may have, ensuring they remain in compliance with state and federal laws.
To learn more about who needs to file a 1095-B form, or to speak with a knowledgeable benefits consultant about health insurance or tax planning, contact the experts at the Business Benefits Group (BBG) today.